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Both options and stocks can diversify your portfolio, but which to choose? Whether or not you're a seasoned investor, this guide can help explain the differences. Options vs. Stocks: Which Is Best ...
Options are a short-term vehicle whose price depends on the price of the underlying stock, so the option is a derivative of the stock. If the stock moves unfavorably in the short term, it can ...
Put options rise in price when the underlying stock falls in price, and this basic option strategy gives the put owner the ability to multiply their money over the duration of the option contract ...
A call option on a stock index gives you the right to buy the index, and a put option on a stock index gives you the right to sell the index. Options on stock indexes are similar to exchange-traded funds (ETFs), the difference being that ETF values change throughout the day whereas the value on stock index options change at the end of each ...
Stock market indices may be categorized by their index weight methodology, or the rules on how stocks are allocated in the index, independent of its stock coverage. For example, the S&P 500 and the S&P 500 Equal Weight each cover the same group of stocks, but the S&P 500 is weighted by market capitalization, while the S&P 500 Equal Weight places equal weight on each constituent.
A trader who expects a stock's price to increase can buy a call option to purchase the stock at a fixed price (strike price) at a later date, rather than purchase the stock outright. The cash outlay on the option is the premium. The trader would have no obligation to buy the stock, but only has the right to do so on or before the expiration date.
Options trading is not for novices, but for seasoned investors who want to add another dimension to their portfolios, hedge against risk, limit downside losses or take big chances in the pursuit ...
%If Unchanged Potential Return = (call option price - put option price) / [stock price - (call option price - put option price)] For example, for stock JKH purchased at $52.5, a call option sold for $2.00 with a strike price of $55 and a put option purchased for $0.50 with a strike price of $50, the %If Unchanged Return for the collar would be:
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